Manama, Kingdom of Bahrain: This year, once again keeping the tradition alive, Cambridge Institute of Islamic Finance launched the 14th edition of the highly acclaimed Cambridge Global Islamic Finance Report (Cambridge GIFR), the oldest yearbook in Islamic banking and finance, in Bahrain. Cambridge GIFR 2023 was launched by His Excellency Sheikh Ebrahim bin Khalifa Al Khalifa, Chairman of the Board of Trustees of AAOIFI at the 18th Annual AAOIFI-IsDB Conference on Islamic banking and finance. Joining this prestigious moment was Dr Ahmed AlShaikh, Chief Executive Officer of Bahrain Institute of Banking and Finance (BIBF), adding further gravitas to the event.

Cambridge GIFR is a valuable resource for Islamic financial intelligence and the most influential and respected annual report in Islamic finance globally. Cambridge GIFR has the unique recognition of being the first report to have documented the size and growth of the global Islamic financial services industry since its inaugural edition.

In 2010, Cambridge GIFR gave an accurate estimate of the Islamic finance industry for the first time. The global Islamic financial services industry surpassed the historical milestone of US$3 trillion at the end of 2021, reaching US$3.178 trillion, and further increasing to US$3.80 trillion, exhibiting annual growth of 19.75%, which is also the highest annual increase in the last seven years. If this trend continues, it should be expected that the industry will breach the US$4 trillion at the end of this year, and may even reach the mark of US$5 trillion by the end of 2025.

A distinguishing feature of GIFR is the Islamic Finance Country Index (IFCI), which has been published annually in the report since 2011. IFCI, the oldest index for ranking different countries concerning the state of IsBF and their leadership role in the industry on a national level and benchmarked to an international level, this year ranked 54 countries. This analysis indicates that Islamic finance is highly concentrated in a few countries and others only contribute marginally to the global Islamic finance industry.

Saudi Arabia retains the Number One position as a global leader in IsBF. Until 2018, the Top 3 IFCI countries (Iran, Malaysia and Saudi Arabia) were not challenged by anyone). The largest economy in the OIC block, Indonesia, remained Number One in 2019 and 2021 but it appears as if the country’s global leadership has once again been questioned by the likes of Malaysia and Pakistan, newly elevated to the third position. Pakistan is emerging as a serious contender for the first position, given its huge population and the favourable government stance on IsBF. Iran is the largest contributor to the global Islamic financial assets. Bangladesh is another gainer, capturing the sixth position. There is no change in the ranks of 11 countries (Saudi Arabia, Malaysia, Brunei Darussalam, UAE, Kuwait, Qatar, Bahrain, Oman, Turkey, Jordan, and Germany) but all these countries have witnessed improvement in their scores.

Last year, there were only 4 African countries in the Elitist Top 20 IFCI countries. This year, the number has gone up to 6 (Ethiopia, Morocco, Tunisia, Kenya, South Africa and Senegal). Ethiopia is the biggest gainer on the IFCI this year, following the installation of Prime Minister Abiy Ahmed Ali as GIFA Laureate 2022, Islamic banking in Ethiopia has assumed mainstream relevance, with an increasing number of conventional banks starting Islamic banking windows.

Each year, the report has a central theme that revolves around a specific trend or future prospect such as; regulations, social finance, leadership, human resource development, artificial intelligence, socio-economic inclusion, & halal industry. This year the report has focused on 'Climate Financing and Islamic Finance', emphasising Islamic finance’s essential role in addressing climate change challenges. It offers comprehensive insights into the green sukuk market, the intertwining of Islamic finance with ESG, AI, and ethical consumerism, and the impact of regulatory bodies and standard-setting organisations in this domain.

“We believe that Islamic finance and responsible finance go hand in hand, strengthening each other. This belief drives us to do good for society and the environment, while also achieving financial goals. We know there will be challenges, but we see them as chances to learn and grow,” remarked Dr Humayon Dar, Founding Editor of Cambridge GIFR.

The theme of the report is relevant in today’s world as during the last 13 years, the industry has undergone significant changes, particularly regarding its growth. The latest challenge is to make Islamic banking and finance relevant to policy matters related to sustainability and climate change. Islamic climate finance has vast potential to bridge the investment gap. According to the United Nations Development Program, zakat alone has the potential to mobilise US$200 billion to US$1 trillion annually for the Sustainable Development Goal agenda, of which climate change is an integral part.

The floods that ravaged Pakistan in 2022, the relentless heatwaves scorching India for two consecutive years, and the widespread drought in Africa have transformed climate change into a potent threat amplifier. The concurrent impacts of climate change, the conflict in Ukraine, and the lingering effects of a pandemic collectively propelled up to 95 million people into poverty in the year 2022 alone. A global consensus is now forming, underscoring the critical role of climate finance in alleviating these repercussions. Conspicuously, Islamic finance has emerged as a formidable supporter of Sustainable Development Goals (SDGs), as its principles closely align with sustainability and a steadfast commitment to the well-being of the planet.

Islamic finance can offer innovative green financing solutions, enhancing the resilience of vulnerable communities to climate change, and fostering environmental awareness and ethics. As a powerful tool for climate action, Islamic finance plays a pivotal role in shaping a greener, cleaner, and more equitable future.

Cambridge IIF extends its heartfelt gratitude to Minhaj University Lahore for their unwavering commitment and support as Knowledge Partner, DDCAP Group™ as a Strategic Partner whose dedication resonates with Cambridge GIFR’s mission to foster and advocate Islamic finance, CIMB Islamic Bank and Gatehouse Bank for striving towards sustainability and climate finance– a testament to their commitment to a greener future. Their commitment to advancing Cambridge GIFR’s mission is a testament to the shared vision for progress and innovation.

To obtain a free copy of Cambridge GIFR 2023, or for further information please contact:

Cambridge Institute of Islamic Finance – Cambridge-IIF – is an independent research centre, specialising in the financial sectors of countries wherein Islamic banking and finance is a significant activity. Leveraging upon the academic resources the city of Cambridge has to offer, Cambridge-IIF is well-positioned to undertake research projects to study the global phenomenon of Islamic banking and finance. Cambridge-IIF aims at conducting policy-oriented research to further spur growth in Islamic banking and finance, with a special focus on the Sustainable Development Goals (SDGs).

Cambridge IFA is a financial services intelligence house that specialises in developing and utilising powerful cutting-edge analytical tools to evaluate business data, assess macroeconomic indicators and understand market trends, leadership positioning and brand development relevant to the development of the financial services industry globally.